Homebuilders contract - mandatory arbitration clauses (Dallas, Howe: appointed, sales, real estate)

[thureen]

Do all homebuilder in Dallas area have mandatory arbitration clauses in their contracts these day? Any homebuilder who don't have them or will actually take them out?

I have been interested in getting new home build from the ground up. I have been doing quite bit of research on homebuilders. I found quite few complaints people were not able to get thier houses properly build. And they couldn't do much about it because of the mandatory arbitration clauses in their contracts.

I know if I get good builder the chances of my having problem are probably low. However, if the small chance does come in play, I would like to have power to actually do something and force the homebuilders to fix the house.

I am now thinking might be better idea to buy a 3-5 years old house that has chance to show any problem it may have with it. Still I have interested to see if there are any reputable builders that have no mandatory arbitration clauses in their contracts. If so, I might go with them.

[momof2dfw]

Not just in the Dallas area but ALL of Texas. No, they will NOT take it out. If you even scratch thru it they will not accept the contract. If you look up even the state laws when it comes to trying to rectify problems w/ builders arbitration is just about the ONLY way you can go AND the state APPOINTED board for resolving issues is HOMEBUILDERS!

[thureen]

I moved to Texas 9 months back from Missouri. Back in Missouri I never heard of homebuilders having such clauses, possibly because most all smaller one. Good thing I did some research on home builders and found it out.

[Grainraiser]

I work for a major bank and my job responsibilty is to work with borrowers and builders when it comes to disputes. I would strongly suggest anyone buying a house has some type of arbitration clause and I will tell you the reason why. If a builder starts building your home and for whatever reason you have a falling out with him things can get really ugly in a hurry. Lets say you decide to terminate the builder and the builder believes you owes him money. The builder and the sub/suppliers are going to file a lien against your property. In order for you proceed on the lender is going to want a clear title before they disburse any money on the loan and this is where everything hits the fan. In the state of Texas the builder has a 1 year lien rights period unless he terminates the contract. This means a lender is not going to release funds for a period of 1 year from the date you terminated and this is assuming the builder does not file a lien. If a lien is filed the only way you can work around it is to either pay the lien, bond around the lien or wait the 1 yr lien rights period. You and the builder should have some type of language in your contract addressing the parameters for terminating the contract. If not you can really get into a pickle.

[nsumner]

All contracts promulgated by The Texas Real Estate Commission have an arbitration clause and you have the option to participate or opt out. This is really for your benefit as a consumer. The arbitration is a swift and cheap way to address issues. The arbitration clause states that a 3rd party agreed upon by both parties will be appointed and if you can't reach an agreement, at that time you take it to court.

Builders have their own contracts and more and more of them are implementing this clause. You can always object to anything you don't like in a contract with a builder. You will find that most of them don't have a completion date, it will state "once completed and passed QC".

Naima

[thureen]

I am still unsure about this. I have decided go talk to lawyer about home builder contracts and see what points he give me about them.

Also, does anyone if any of the builders actually have their contracts online that I can look at and possibly show the attorney? Thanks in advance.

[Grainraiser]

I have never seen a builder put his contract on line. Just make sure you and the builder have a opt out clause in the contract that releases either party without a hefty penalty. I also would not sign a cost plus contract because it does not give the builder an incentive to keep the budget on tract. The more the project cost the more the builder gets paid.

[kstutler]

My best advice would be to check custom home builders. However one other point is that you also want to talk to a good ethical consumer based attorney. Never, Never sign an arbitration clause. Walk away! When you go to buy your new home the best advice that I can give you is to buy a home built before the 90's that is when things seem to go down hill and that is per my engineer. Also if you really want to protect yourself please don't just hire a inspector but hire an engineer and yes he will cost more but in the end it will save you the heartache and headache that my family has faced with our new home. We have a 100,000 loss in value due to builder defects and 25,000 invested in legal fees and experts. We refuse to pay the other 25,000 they want to arbitrate. So we are selling the dump as is with full disclosure and our 9 acres will be what saves us. I am a real estate agent who has put her license in escrow as I refuse to sell homes to people with that clause included and not to mention that my broker included the abusive clause in my sales agreement. Arbitration is in your new car contracts, nursing homes, daycares, products you buy and how about those games you play at McDonalds??? They are everywhere so beware! [MOD CUT]

Originally Posted by thureen

Do all homebuilder in Dallas area have mandatory arbitration clauses in their contracts these day? Any homebuilder who don't have them or will actually take them out?

I have been interested in getting new home build from the ground up. I have been doing quite bit of research on homebuilders. I found quite few complaints people were not able to get thier houses properly build. And they couldn't do much about it because of the mandatory arbitration clauses in their contracts.

I know if I get good builder the chances of my having problem are probably low. However, if the small chance does come in play, I would like to have power to actually do something and force the homebuilders to fix the house.

I am now thinking might be better idea to buy a 3-5 years old house that has chance to show any problem it may have with it. Still I have interested to see if there are any reputable builders that have no mandatory arbitration clauses in their contracts. If so, I might go with them.

[cdelena]

What makes it worse is that the arbitrators seem to operate in a very narrow interpretation of the contract and warranty. I have lost in arbitration on what seemed to be a technical basis... I could easily prove defects in construction but as the arbitrator concluded the house was safe for habitation so there was no builder liability.

[NS_Highlander]

If it comes to Arbitration, it is most times a waste of time for the home owner. My attitude is you get better and faster results just protesting outside their sales office.